Search This Blog

Wednesday, October 23, 2019

Bad week for AIMS APAC and Eagle HTrust

When it rains it pours, as the cliche goes.

AIMS APAC REIT (AA REIT) suffered a correction earlier this month when its Manager (AIMS Financial) decided to unload shares amounting to around 10% of the float via private placement.

The private placement was done at 1.35, which is a significant discount from the last traded price 1.48 prior to the placement.

The reason given by the Manager was ostensibly to increase the liquidity of the share.  Seems more like a blatant cash grab to me.  Perhaps investors should have foresaw this cash grab when AIMS acquired the AA REIT shares from AMP Capital earlier this year, and became the sole sponsor. 

Expectedly, the market reacted by selling down the stock, and it is now hovering pitifully around the 1.35-1.37 mark, wiping out a good 30k off my AUM.

If there is a silver lining, it would be that this divestment is not the same as a rights issue. The total number of shares remain the same.  It is merely the Manager reducing its ownership in the REIT which it manages.  So, all else being equal, i.e., assuming DPU is consistent, you could say that this correction presents an opportunity to load more AA REIT shares at a discount.

What should be of concern, and rightfully so, is whether the manager's reduction in alignment with AA REIT would adversely impact the REIT's future performance.  IMO, too early to tell. 

For now, I am still keeping my faith. And may buy small chunks at the "right price" to average down.


Eagle HTrust has also seen some downward pressure on hits share price. Its intraday low today was 0.635.  Unlike AA REIT, my research yielded no answers as to the potential reasons for the sell down. Based on Eagle's last report, its earnings came in modestly better than forecasted.  See: https://www.businesstimes.com.sg/companies-markets/eagle-hospitality-trusts-maiden-dpu-beats-forecast

At current price, its expected yield is near 10%.

But it would appear that Madam Market knows something that I do not yet know. 

My view is that this share might be unpopular amongst investors due to its lack of big name institutional investors, and such sentiment may also be driven partly by investor short-termism (Eagle is not distributing any income until Q1 next year). 

Again, I am going to keep the shares for now. My position in Eagle is small relative to my portfolio and that allows me to tolerate a bit more risk. 

No pain, no gain.

Onward to FI friends!















3 comments:

  1. Is it true that aims financial bought at $1.40 and place out at $1.35 ?
    Doesn't seem logical.
    Thanks.

    ReplyDelete
    Replies
    1. Unfortunately, I looked through AIMS APAC earlier announcements on its website, and did not find information regarding the price at which the shares were acquired from AMP Capital

      Delete
  2. I saw the insider trades,there was a sale of about 70.3 million units at 1.40.
    Could this be the purchase price by Aims Financial ?
    What's your thoughts on this.
    Thanks.

    ReplyDelete